The bill is for saving failing banks. It's most controversial clause is the 'bail in' clause. It stipulates that if the bank you have deposited your money in is not doing well then the government will use your deposited money to save the bank. All your deposits will be wiped out to save the bank.

“Certain misgivings have been expressed in the media regarding ‘bail-in’ provisions of the FRDI Bill,” the statement added. “The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide additional protections to the depositors in a more transparent manner.”

This statement comes against the background of increasing criticism in the media and on social media of the perceived nature of the ‘bail in’ clause, which allows a Resolution Corporation to cancel or modify the liabilities of a failing bank, something analysts have said could extend to bank deposits as well.

“The FRDI Bill is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where consent of creditors/depositors is not required for bail-in,” the statement added.

I now get on with my "banking Armageddon amendment" that is under way. Read the post and all the links that I have provided here and you will understand as to how the "kitchen sink" is thrown at you by this Govt.

1. Banks, the world over, get into problems, when the loans advanced by them are not repaid on time, by the borrowers. When the economy is in a slow-down, many of these borrowers go belly up and become NPAs.

2. Normal banking prudence suggests that the banks should auction the assets given by the borrower as security, at the time of taking loans. Generally banks insist on 150% security of the loan amount. For example, if a borrower wants Rs.100 as loan, he has to provide security worth Rs.150 before availing the loan.

3. However, for big borrowers, every norm is flouted and when they become NPAs like that of Anil Ambani in Telecom, you are talking of outstanding dues worth Rs.45,000 Cr. Now the question is, who will replace the funds, that were loaned to him.

4. Today the NPAs of Indian Banks, amount to over Rs.10 Lac-
Cr. Jaitly or Urjit Patel do not give the actual figures. To resue these banks, the Govt. has 2 options. They are called "bail-out", which means the Govt. uses the taxpayers' money to fund the bank. This is very wrong but it has now been happening, quite regularly in India,

5. The other monstrous option is called "bail-in". The is the term that forms the very pivot of this post and has never been resorted to, in our country earlier. Now what is "bail-in". The dictionary meaning of "bail-in" is - "rescuing a financial institution on the brink of failure "by making its creditors and depositors" take a loss on their holdings". A bail-in is an internal process and is the opposite of a bail-out, which is external and handled by Govt. with budgetary allocation.

6. You just deposit your money in a bank as a "Savings Deposit or Fixed Deposit" to use it whenever you want. You have no clue as to how well the bank is managed. Now Modi & Jaitely have got a bill approved by the Cabinet called "The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017" and this has now been referred to a Joint Parliamentary Committee before getting it passed in the Parliament.

7. This bill covers "bankruptcy of businesses such as banks and insurance". Financial resolution includes solutions for banks facing ‘imminent’ risk to their viability & their very existence, depending on their capital, asset worth and quantum of NPAs.

8. Now comes the wily Jaitley into the picture. This Bill also introduces the provision for a “bail-in”, whose purpose is to provide capital to absorb the losses of a bank and ensure its survival. Here, survival does not mean safety of depositors’ money, but restoration of capital of the bank. The bail-in empowers the bank to cancel a liability owed by the bank or change the form of an existing liability to another security.

9. In simple words, it means that your savings account balance of Rs.15 lacs, can be reduced to Rs.1 lac, which is mandatory by law. Or they can convert your savings account balance of Rs.15 lacs to a Fixed Deposit, repayable after 5 years, giving you of 5% annual interest.

10. A question may arise in your mind, if such things happen abroad. Certainly yes and in a big way. Cyprus was the first country to the face "bail-in" in 2013. The depositors lost 47.5% of their savings in phase-1. They also had a phase -2. See the report from Cyprus Mail, which screams "Lenders set Bank of Cyprus bail-in at 47.5%" View the link. http://cyprus-mail.com/2013/07/28/le...ail-in-at-475/

11. After this, the G-20 Nations, comprised of Nations that include US, UK, Japan, Germany, France, China, Australia, Canada and others have officially approved this process. Incidentally India is also a part of G-20. View the link. https://www.nestmann.com/its-officia...ins-are-coming

12. When the banks make hefty profit, you don't get anything but when they are into losses, "suppliers & depositors have to lose their money. And the heartless duo of Modi & Jaitley have come up with yet another brutal aspect. Just unbelievable.

13. To recover the money from the defaulters, there is no attempt so far by the Reserve Bank of India to blacklist these entities from getting further loans or prevent their managements from retaining a majority equity stake, as penalty for the huge haircuts (writing off loans) being taken by banks. Ambanis & Essars can go away scott free and we depositors have to clean the toilet.

14. In a nut-shell they are now trying to shift the responsibility of rescuing the "sinking banks" from the Govt. to the Suppliers & Depositors of the Bank. The borrowers can go on a fishing trip. Trust in Banking Industry would be decimated. People would gradually close all their bank accounts and keep their cash under the bed. Bloody madness.

Share this extensively thru' every social media. This bill should not be allowed to become an act.

A lot of people I know are panicking over this . They are wondering if their life savings will be wiped to save their bank if the bank is not doing well .

An online petition asking people to sign against the bill is circulating on Facebook and it has gathered 40000 signatures in 2 days .

Like I said it's easy to fall prey to such cooked up news and circulation of "daily outrage list" .. especially those written up with good english .. typically it comes from a Bong or Tamil guy seen by most as an intellectual "journalist".. or a banker like AAPtard Meera Sanyal.

Same kind of morons are saying RBI released Rs. 350 note over 2 months back.. and that 2000 Rs. note will be withdrawn by Modi on Dec 31st at midnight. You are completely free to believe anything you like..

If the bank is in trouble, you are screwed anyway. On bank I had FDs in had a high interest rate. I enjoyed that for a while and realized the rates were unsustainable and withdrew all my cash leaving the minimum deposit. Soon enough the bank sported one big set of locks.

If the bank is in trouble, you are screwed anyway. On bank I had FDs in had a high interest rate. I enjoyed that for a while and realized the rates were unsustainable and withdrew all my cash leaving the minimum deposit. Soon enough the bank sported one big set of locks.

Pita ji was pursuing recovery of 500-1000 that I had left with the bank. Not sure if that ever came. Now, not sure how this bill will help in such cases. But if AAP is opposing it, it must be good.

Your bank must have been a co operative bank . Government banks are merged into other banks if failing. For example bank of patiala and Hyderabad bank were merged into state bank of India without depositors losing any money.

^^
The only banks which have fallen so far are the cooperative banks or low level banks. The other banks i can think of are Global Trust Bank (Merged into Oriental Bank) and BCCI (bank of commerce and credit international- as crooked as its abbreviation sake cricket body), which was a Pakistani Bank with a lot of peaceful depositors in Mumbai.

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This is quite a game, politics. There are no permanent enemies, and no permanent friends,only permanent interests. - Some Firang